Connexion shares jump after GM revealed as its fleet system marketing partner

SHARES in Connexion Media rocketed 40 per cent in early trade on the Australian Stock Exchange after the Melbourne-based software developer revealed that General Motors would distribute its fleet management product in the United States.

Investors pushed Connexion shares up from 25c to as high as 35c in early trade before the price settled back at 28c, valuing the company at $45.6 million.

Connexion media chief executive officer George Parthimos said that the deal with GM will give the company a massive boost.

“This is a game-changer for Connexion,” he told GoAuto from Las Vegas, where he is attending the Consumer Electronics Show.

It is probably the first connected car solution for an embedded car directly targeting consumers that’s even been done,” Mr Parthimos said.

GM has dubbed the system Commercial Link and it will be sold through 4000 GM dealerships across the US starting later this year.

The American car-making giant was able to adopt the Connexion Media fleet management system – marketed as Flex in Australia – because it has been installing the OnStar concierge system, and the necessary communication links, in its vehicles for years.

“GM has been quick off the mark because they are in a pretty strong position because they already have embedded cars out on the road,” Mr Parthimos said.

“They made the heavy investment in connected cars years ago and that’s why they were so fast to get a product as good as Commercial Link almost ready to go to market.”

Mr Parthimos said there was an opportunity for GM to take Commercial Link to other markets in Europe and Asia.

GM currently installs the OnStar 4G system in 30 different models, including all cars made in the US.

“Each one has a built-in 4G connection for OnStar and GM is the biggest connected car maker on the planet at the moment in terms of installed base,” he said.

According to Mr Parthimos, the Flex system is currently being evaluated by eight other car-makers and aftermarket distributors, with five trials being held in Europe and three in the US.

“All those trials are progressing and none of them have said no, so we are still going through the process.”

Connexion had to dramatically upgrade its hardware when it won the contract with GM. The company had previously expected to have around 20,000 vehicles online, based on its Australian business.

When it won the Commercial Link contract, it had to raise $2 million in order to boost its processing capacity to 1 million vehicles simultaneously, as well as install a suitable call centre in Melbourne.

Like its other product, the miRoamer internet radio infotainment system installed by Volkswagen and other car-makers, the Commercial Link system involves no up-front payment.

“The deal is a straight-out revenue share. There are no retainers. It’s all based on a rev-share between us and GM.

“GM look after all the sales, marketing and promotion at the front end and we look after all the technology, the back end support, the call centre, that kind of stuff,” Mr Parthimos said.

“This is a world first. When people look back in 10 years time, when all the cars are connected, and ask what was the first service that consumers could use that was embedded, this is it.”